Government May Subsidize Mortgage Modifications

Hmmmm. Since I'm self employed, does it not make sense to lower my pay for one year and refinance my mortgage at a lower principle amount and lower interest? I'm sure many people will game the system.-Lou

Government May Subsidize Mortgage Modifications

President Barack Obama’s administration is reportedly in talks to finalize a mortgage subsidy program geared toward at-risk borrowers not yet delinquent on their loans.

Unnamed sources on Thursday told Reuters the plan involves a reappraisal of homes for value and affordability, as part of an examination of homeowners to determine eligibility for the subsidy program. Sources also told Reuters that homeowners would not need to prove hardship to qualify for the program, which would subsidize lenders that lower monthly payments.

In addition to the segment of not-yet-delinquent borrowers the plan targets, another distinguishing feature of the subsidy program would be its lowered mortgage payment-to-income ratio from the level that currently defines other workout programs like the one employed by the Federal Deposit Insurance Corp. at failed IndyMac Federal Bank.

Most modification and workout strategies currently target a 38 percent debt-to-income ratio, meaning homeowners with mortgage payments of more than 38 percent of their gross monthly income are eligible for participation. (Sources told the New York Times the new ratio would likely be 31 percent.)

Read Article Here:
http://www.housingwire.com/2009/02/13/government-may-subsidize-mortgage-modifications/